The Dutch dividend withholding tax Act was amended on 1 January 2018. In short as a result of which:
- Expansion of the Dutch domestic dividend withholding tax exemption to qualifying shareholders resident in a jurisdiction that has concluded a tax treaty (including dividend article- an overview is available upon request) with the Netherlands (the Domestic DWHT Exemption). Prior to 1 January 2018 the Domestic DWHT Exemption was already available for qualifying shareholders tax resident in the EU/EER; and
- Distributions on qualifying membership rights by Dutch Cooperatives that qualify as so-called "Holding Cooperative" will in principle be subject to Dutch dividend withholding tax. Whereas de facto the dividend can still be exempt from Dutch dividend withholding tax in case the requirements of the Domestic DWHT Exemption are met.
Important to note is that as a result of the amendments, Dutch entities applying the Domestic DWHT Exemption as withholding agent, have been obligated since 1 January 2018 to file a declaration with the Dutch tax authorities. This new filing requirement can in practice be easily overlooked.
Obligation to file declaration with Dutch tax authorities
As of 1 January 2018, Dutch entities distributing a dividend for which the Domestic DWHT Exemption is applied, are obligated to file a declaration that the requirements for the Domestic DWHT Exemption are met (Declaration Obligation), even in case distributions are made to recipients in the EU/EER. Such declaration should be filed within a month after the dividend was made available. The Dutch tax authorities have created a standard form of declaration that should be completed and filed. Prior to 2018 there was no Declaration Obligation for distributions made under the then available Domestic DWHT Exemption to qualifying shareholders resident in the EU or EER. In practice groups with Dutch group companies within their structure should review the impact of the amendments to the Dutch dividend withholding tax Act and make sure to update internal compliance procedures in case of application of the Dutch DWHT Exemption.